UPDATE 1-Q1 municipal bond issues lowest in 11 years-data
(Adds number of issues, March sales)
WASHINGTON, March 31 (Reuters) - New sales of municipal bonds in the first quarter of 2011 sank to $46.43 billion, the lowest quarterly level in 11 years, according to preliminary Thomson Reuters data released on Thursday.
The last time sales of debt issued by U.S. states, local governments and other authorities were lower was in the first quarter of 2000, when they were at $39.09 billion, the data showed.
Few new bond deals have come to market this year, although issuance has ticked up slightly recently. January's volume of $12.29 billion was the lowest since January 2000.
As of March 30, sales for the month had crawled up to $17.89 billion, which was less than half the $44.39 billion sold last March when Build America Bonds helped buoy the market. The taxable bond program, which ended in December, paid issuers a federal rebate equal to 35 percent of interest costs, an amount so steep that issuers rushed to sell the debt.
Still, even when the volume of BABs issued last March, $12.62 billion, is subtracted from the month's total issuance, the level is nearly double the level hit this month.
Altogether, there were 1,808 new issues in the first quarter. (Reporting by Lisa Lambert; editing by Jeffrey Benkoe)
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1) Most industry experts have been repeating the same mantra for months: Debt levels for U.S. local and state governments are relatively low & annual debt service represents a small part of budgets,” Fitch Ratings said on 11/16/10 that annual debt service per state is low in the 3-5% range. Now if a corporation only had 5% debt it would be amazing! States are cash machines that earn a percent on all business conducted there. Things have to be really bad for corporate bonds to yield higher than the muni bonds of the same state? Yet thats we are seeing this again. If states can reel in expenses they are a golden ticket.
2) Ask any Muni bond professional how is business and they all say its an excellent year “making more money than ever before” due to retail investors panic like selling.
Whats really going on in the muni market? The main issue is the public’s concern over digging out from budget deficits made worse by platinum public pension plans and an the illiquid muni market.
To see a detailed analysis of your own muni bonds go to http://www.bondview.com , a free analysis tools for muni bond investors.
Jim Walker
www.Bondview.com
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